5 rules for retailing in recession (HBR)

In the last issue of the Harvard Business Review, you can find an interesting article about the "Five rules for Retailing in a recession" by Ken Favaro, Tim Romberger and David Meer (all working in Consulting Company).

What's new with the big crisis for retailers ?

The authors are determining 5 key rules of conduct in order to strengthen retailer's position in a downturn market:

1) Go where the headroom is

Headroom is defined by the market share you don't have minus the market share you won't get. In short : avoid to multiply the initiatives but rather focus on protecting your most loyal customers as #1 priority.

2) Close the Needs-Offer Gap

This approach favours to expand the average basket spending rather than convincing new customers to come in. Usually you analyse what you sell but seldom have a loser investigation on what you could sell.

3) Go after bad costs

Key point is to establish a link between retailer's costs and each aspect of the offer. Drop dead the classical ABC costing for a customer-benefit costing.

4) Cluster Store

A recession inevitably will lead you to differentiate your stores. Tailoring your offer and concept will help you to stick with your local customer base. Take care of no adding too much complexity in the process that could withdraw the benefits of the clusterisation.

5) Retool Core Process

To be consistent and gain efficiency it's important to change some key process : customer research, merchandise planning, performance management and strategic planning. When a retailer is usually asking for : who is our customer ? should switch to the "why are customers shopping our stores" and "what do they buy from other retailers" questions.

Thank's Chris for the tip !

A selection from Art Paris

Aleix Plademunt, from the series "nada" - Olivier Waltman Gallery

Ulrich Lamsfuss, Stockfood 224560 - Daniel Templon Gallery

David Reimondo - Monde
Jurgen Nefzger - Nocturnes

Art Paris is a contemporary art fair where more than 100 galleries present their current artists to the parisian public under the dome of the Grand Palais. Here's a selection of pieces that got my attention, still with a "retail" point of view....

Keynes and the problem of queue in Supermarkets

photo credit - steve crane on Flickr

That's a universal problem for every customer : after having spend much time (too much time) in the store, looking for all the needed (and unneeded) products, it's now time to pay.

And the question is : which check out will be the fastest ?

Economists have tried to analyze the situation with the Random Walk theory, a mathematical formalisation of random elements. Complicated studies for a simple result : there is no answer !

Why ?

Well, if people had a way to find the fastest line, most of the customers would join it and it would not be the fastest line any longer... This is the same principle John Maynard Keynes refered to when he described how does the stock market works in his General Theory of Employment, interest and money . Keynes compared the stock market to a beauty contest where people were invited to choose the nicest girl (that kind of contest were very popular at that time). The winner is the one who choses the girl closest to the general opinion.

As Keynes writes : "it is not a case of choosing those which, to the best of one's judgement, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the 3rd degree where we devote ou intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the 4th, 5th and higher degrees."

That's why when you've chosen the "seems to be" fastest line, it becomes to slow down...

From my own experience, when all lines are very busy, you may find a better way at the extremities, especially the closest line from the entrance, as people tend to finish their shopping circuit at the other side of the store. But that's a very empiric method.

Other tip from personal experience: pretty cashier girl usually get more cash at the end of the day (attracting more men clients ?). So choose the not so attractive ones for a fast check out !(Sorry, no photos for that point...).

Next post : how does Disney manage extremely well the queue problem...

Example of Beauty Contest for 1953 (Keynes wrote his theory in 1936)

Making love in Supermarkets

I was pretty sure to get your attention with such a post title directly inspired by the book of Daniel Miller, A Theory of Shopping. Daniel Miller is an anthropologist specialised in material culture and consumption. 

How shoppers develop and imagine social relationships of love and care through the act of selecting goods is one of his thesis. He observed shoppers in the North London and discovered that shoppers do not buy what the others members of the family asked for but rather try to influence relatives habits, buying healthier food, better clothes (supposed to be) than they would expect. 

Housewives (80% of households food buyers are women) see her role as selecting goods which are intended to be educative or judged as morally superior (bio, better taste, ...). As Miller writes, "shopping is primarily an act of love that in its daily conscientiousness becomes one of the primary means by which relationships of love and care are constituted by practice". 

Shopping do not reflect love says Miller but is a form in which love is manifested and reproduced. Miller asses that each shopper is looking for thrift (value, sales, promotion, good deal, ...) and treat (extra product as a reward for the time and effort spend).

Well, that said, what are the implications for the retailer ?

Give value to the housewife shopper buying your product. She cares so you need to give her reassurance with product information,... explaining the benefits of your product. Never forget that each customer is looking for a personal treat, a direct reward to the shopper for carrying out the act of shopping. Is your assortment considering thrift and treat ?

This book is a recommendation from Luc Wise of V agency

 

Should we ban strawberries in winter ?

Some retailers like Casino in France begin to communicate on the packaging of their Private Label the greenhouse gas balance. Beyond the Marketing effect, it raises some questions for the consumers. It surely may afraid a bit more shoppers and if it’s used to compare products in shelf, anyone must be sure of the method used to measure it. Imported products are on focus for the transportation impact on CO2. Some groups are flourishing in the west coast of the US, the locavores, which purpose is to "eat locally" so they only consume food produced in an area of 100 miles around San Francisco bay.

But nothing is simple and we may perhaps be once more victim of a counterintuitive situation. A study from the Department of Civil and Environmental Engineering of the Carnegie Mellon University (here) demonstrates that even carried on large distance (mean of 6700 km) transportation represents only 11% of greenhouse gas emissions. In fact 83% of the gases has to be attributed to production mode.

By the way, and that’s even more interesting, the kind of food shows very disparate rate of gas balance. Indeed, red meat is around 150% more greenhouse gas intensive than chicken or fish. Conclusion, to save the planet, it’s more efficient to switch your diet, reducing the consumption of red meat and dairy products than quiting strawberries in winter…

Instinct vs. "Super Crunching" ?

Google is changing our lives. How ? By turning data into profits. His data mining and capacity to deal and sort out conclusions that makes sense from terabytes of data has changed everything. We’re switching from the power of the experts and experience to the realm of standard deviation and logarithmic formulas (formulas better kept that Coca-Cola recipe !).

Ian Ayres book’s describes amazing examples of application of “Super Crunching” in fields as different as Wine testing (predict future value of Bordeaux vintage upon average summer temperature and rain level during harvest) or Casinos. I was impressed to learn that Harrah’s Casinos predict how much his gamblers are ready to lose and still enjoy the game to be able to come back. The “pain point” of the gambler is estimated with information like age, sex and wealth through his zip code area. Passed the determined "pain point" or maximum estimated loss, a gift / invitation is gently offered to the selected customer ! How to transform a big loss in enjoyable experience...

The interesting point with Super Crunchers is the way it describes the switch between instinct or experience vs. quantitative analysis to predict outcomes.

Transposed to the Retail area, it seems that defining the product to be promoted is, in most cases, more the result of an opportunity rather than a deep analysis of its profitability, cannibalization effect or capacity to attract new customers.For example, this photo shot in Carrefour where all kind of shampoo are in promo in the same time.

When more is too much !

I shot these "gorgeous" photos in Mexico, maybe in a Comercial Mexicana supercenter. Beans is a traditional meal in the Mexican gastronomy and may sometimes appear a bit strange for the European palate. I should say that just the view of the pics keeps out hungriness !

Those interested in that kind of stuff may find much more recipes here. (take care !)

Why more is less ?

... c'est le sous-titre de l'ouvrage de Barry Schwartz, The Paradox of choice. L'auteur va à l'encontre d'un préjugé que les retailers connaissent bien : la multiplication du choix dans les assortiments est favorable au chiffre d'affaires. L'idée que la multiplication des choix va de pair avec le développement de la liberté et de l'autonomie de l'individu est remis en cause par B Schwartz qui y voit plutôt un motif d'insatisfaction et de stress des clients.

Ce livre apporte un double éclairage sur la question. Il décrit en premier lieu comment faisons nous pour choisir. Quels sont nos ressorts psychologiques face à une alternative ? Entre la définition des objectifs, l'évaluation de chacun des objectifs poursuivis (goût, prix, praticité, ...), le rôle du contexte et de l'environnement sur le choix le shopper est soumis à dure épreuve. A tel point que cela pourrait entraîner un désarroi face à cette abondance de choix. Les hypermarchés en seraient aussi les victimes qui, pour se différencier mais aussi pour justifier la taille de leurs espaces de vente ont multiplié à l'infini les références.

A l'inverse, le Hard Discount ne propose le plus souvent qu'une seule option par unité de besoin client. Temps de course réduit, moins de stress, cela serais-ce aussi une des clés de leur succès actuel ?

Lequel choisir ?

Nous reviendrons sur ces questions de définition d'assortiment ultérieurement...

More is less

Voilà un exemple impressionnant de signalisation et d'effet de masse chez Kaufland en Pologne. Que retiens t on à la fin de cette "forêt d'affiche"?

Nesquick Promo

Impressionnante promo !

On se demande comment font les clients pour acheter leur boite de chocolat en poudre favorite... sans tout faire tomber !

Retail + Religion

Photo prise à Pâques à Bogotá, Colombie.

On peut espérer que les ventes de thon en boite (vert : à l'huile / bleu : à l'eau) furent bonnes.

Ce qui est sûr c'est que la productivité des employés n'est pas vraiment au rendez vous pour monter une telle TG...